Correlation Between Precision Optics, and Franklin Wireless

Can any of the company-specific risk be diversified away by investing in both Precision Optics, and Franklin Wireless at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Precision Optics, and Franklin Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Precision Optics, and Franklin Wireless Corp, you can compare the effects of market volatilities on Precision Optics, and Franklin Wireless and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Precision Optics, with a short position of Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Optics, and Franklin Wireless.

Diversification Opportunities for Precision Optics, and Franklin Wireless

0.28

Correlation Coefficient

Precision Optics,  Franklin Wireless

Modest diversification

The 3 months correlation between Precision and Franklin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp and Precision Optics, is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Precision Optics, are associated (or correlated) with Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Precision Optics, i.e., Precision Optics, and Franklin Wireless go up and down completely randomly.

Pair Corralation between Precision Optics, and Franklin Wireless

Given the investment horizon of 90 days Precision Optics, is expected to generate 1.94 times more return on investment than Franklin Wireless. However, Precision Optics, is 1.94 times more volatile than Franklin Wireless Corp. It trades about 0.07 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.11 per unit of risk. If you would invest  450.00  in Precision Optics, on October 9, 2024 and sell it today you would earn a total of  59.00  from holding Precision Optics, or generate 13.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Precision Optics,  vs.  Franklin Wireless Corp

Precision Optics,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Optics, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Precision Optics, demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Franklin Wireless Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Precision Optics, and Franklin Wireless

The main advantage of trading using opposite Precision Optics, and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Optics, position performs unexpectedly, Franklin Wireless can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Wireless will offset losses from the drop in Franklin Wireless' long position.

The idea behind Precision Optics, and Franklin Wireless Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.